On March 6, 2019, the Financial Stability Oversight Council issued new proposed guidance regarding the designation of nonbank financial companies as “systemically important financial institutions.”
The proposal makes substantial changes to FSOC’s existing designation approach by shifting its focus away from an “entity based” approach towards an “activities based” approach. Designation of an individual firm would only occur if FSOC determined that efforts to address the financial stability risks of that firm’s activities by the primary federal and state regulators have been insufficient. These changes, together with the fact that there are no longer any designated firms, raise questions about the scope of FSOC’s role going forward beyond a high-level coordinating function.
This article was republished by The Columbia Law School Blue Sky Blog.